RIM accused of backdating stock options

Canadian handset maker Research In Motion has been accused of backdating hundreds of thousands of stock options to make them more lucrative for company executives, by an American professor.

Professor Erik Lie, whose work has led to nearly 200 investigations in the US, says in an affidavit “I believe that backdating has taken place here”. His filing bolsters a court action by the Ironworkers Ontario Pension Fund, which owns 13,200 RIM shares.

Prof. Lie comes with an impressive background: in the US, he is a notable expert on backdating and has been behind 180 major SEC investigations. Last September he testified on a backdating enquiry heard by the US Senate.

Prof. Lie has argued in his filing that after reviewing option grants from the firm since it went public in 1997, he believes options were granted to executives when they would be most profitable.

In a statement made available to Telecoms.com, RIM said: “The Company’s Board of Directors intends to review the allegations… and will respond in a manner that it considers to be in the best interests of RIM’s shareholders.”

RIM has yet to file a statement of defence.

The allegations are linked to an ongoing dispute with the Ironworkers fund which is trying to force the Blackberry maker to change how RIM conducts an internal investigation into its stock option practices. In December the pension fund demanded RIM use independent inspectors to review stock option grants at the company. It alleges that RIM’s directors are not independent because they are too close to the stock option program.

Ironworkers, which owns $2m (£1.01m) worth of RIM shares, asked the Canadian firm to take the investigation away from RIM’s own audit committee. At the time Dimitri Lascaris, the lawyer representing the pension fund said: “The public needs to know that the independence of these people is compromised, at least from our perspective, and there needs to be a public debate about this. The company is avoiding the subject and nobody has challenged them.”

RIM countered, arguing the independence of the directors overseeing the investigation.

According to the court’s filings, Prof. Lie was asked by the pension fund to investigate whether options granted to RIM executives were backdated.